Cadbury Schweppes and Masterfoods put aside their differences to create the Be Treatwise initiative, using GDAs to help consumers make healthier food choices. Eight other major suppliers follow suit, undermining the FSA's support of traffic lights. Tesco confirms it will move into the US with a convenience format after months of denial. One independent chain, Curley's, in west Belfast, adds to the debate on supermarket dominance claiming that the arrival of an Asda nearby has helped sales. The ACS says hopes are fading that the OFT will refer grocery to the Competition Commission. Chief exec David Rae says independents, as well as pharmacists, bakers and butchers, should put pressure on the regulators.
OFT chief executive John Fingleton confirms that the grocery retail sector will be referred to the Competition Commission for investigation. A survey by The Grocer shows how cynical the independent sector is about the inquiry: just 9% of independent retailers believe the investigation will benefit them. Peter Marks, CEO at United Co-operatives, calls for a unification of the co-op societies to form one national society. Tesco announces that Richard Brasher will succeed Tim Mason as director of UK marketing, leaving Mason to head up the chain's US expansion plans. The government confirms that food processors and packers will be included within the remit of the Gangmasters Licensing Act, which will make it an offence to use unlicensed gangmasters.
Tesco's alleged land bank is brought under the spotlight by its empty Extra store in Slough, which Slough Borough Council claims Tesco is retaining to block competitors, but Tesco's PR machine responds with the announcement of a £100m environment fund. Ofcom outlines four proposals for reducing the number of ads children see on TV, but stops short of recommending an all-out ban. Suppliers go public, rebuking Asda for its "outrageous" financial demands that it hopes will cut £750m in payments to suppliers. In response COO David Cheesewright says suppliers can call him directly with any concerns. In the same week Asda falls to third, behind Sainsbury's, in ACNielsen's market share data for the first time in three years.
Northern Foods chief executive Pat O'Driscoll hoists a for sale sign over several of the company's processing arms to focus on the core business after a £17.1m fall in full-year pre-tax profits to £45.1m. The number of non-affiliated c-stores slumps to less than half (49.2%) of the total convenience market for the first time, according to IGD data. Tesco pledges to cut up to 260 lorry journeys a week by moving heavy freight to rail. OFT chief John Fingleton says small c-store operators should focus on business rather than the Competition Commission inquiry. Meanwhile, Asda ditches all bogofs and "gimmickry" to get back to the basics of EDLP. And Nisa-Today's board outlines to members the benefits of a merger with Costcutter.
The Grocer names Asda as the UK's cheapest grocer at The Grocer Gold Awards, but Tesco is named Britain's favourite grocer. The industry rift over food labelling deepens as the GDA labelling scheme created by five manufacturing giants debuts on packs of Shreddies and Danone's Shape drinks range. The Nisa Members Association's challenge to the Costcutter merger gathers pace. It claims that the deal would create £125m debt, which would have to be serviced by the customer base. Elsewhere, hhard discounters Aldi, Lidl and Netto start their push into organic food with organic rice, coffee and beer while at the struggling discounter Kwik Save, managing director Paul Niklas and finance director Steve Payne leave after less than four months in their posts.
Premier Foods announces plans to double recently acquired Quorn's business to £200m, and acquire the UK arm of US-based Campbell Soup Company while Northern Foods dispatches the first of a series of sell-offs, its chilled distribution business NFT Distribution, for £51.2m to a new group formed by an MBO. The MLC is axed following the government's review of the levy system. The OC&C index of the UK's top 150 food and drink suppliers finds them in rude health, with margins up to 9.5% from 9.1% the year before. The Nisa Members Association says it now has enough weight to block the proposed merger with Costcutter. Asda manages to quell talk of a five-day strike but still faces complaints about its pick rate ambitions.
Spar UK and The Co-operative Group form a buying alliance to cut costs while Bestway joins the Nisa-Today's/Costcutter fray, saying it is keen to make an offer to buy Nisa-Today's. Kwik Save's new MD Andrew Villars promises to up availability, speed up IT upgrades and improve delivery times by the end of the month. The ACS says it will draft statements from a group of small, unbranded c-store operators to submit to the Commission inquiry. Tesco says it will reward shoppers who reuse carrier bags with Clubcard points. Analysts urge RHM to buy the operations Northern Foods wants to dispose of. Aldi announces plans to spend £200m building 150 stores in Scotland. Miller ADM Milling warns bread prices could soar.
McCain breaks ranks with other suppliers by providing traffic lights on the front of its packs as well as GDAs. In the week the Competition Commission starts its face-to-face meetings, farmers say the OFT should police the grocery market in the future to make sure retailers and manufacturers don't abuse their positions of power. British Retail Consortium boss Kevin Hawkins argues buying power is not the issue, blaming a decline in demand for traditional commodities instead. Meanwhile the Nisa Members Association lodges a complaint with the OFT about the proposed Nisa/Costcutter merger. Tesco tests infrared queue management technology in nine London Metro stores and Kwik Save shows the first signs of improved availability.
New legislation on age discrimination, the national minimum wage, maternity rights, fire safety and gangmasters is introduced on October 1 causing concerns that costs will soar (minimum wage ) and that recruiters may unknowingly break the law (age discrimination). Small crisp supplier Tyrrells makes headlines when it gets Tesco to back down in its attempt to stock the crisps without Tyrrells' permission. Kwik Save's latest MD Andrew Villars departs after less than three months in the job, shortly after the chain buys 45 stores from former owner Somerfield, which itself pulls the plug on its Market Fresh and Essentials formats. The Nisa-Today's/Costcutter merger is called off amid allegations of cartel activity.
Dudley Ramsden, founder of Nisa-Today's, retires as executive chairman while a tie up with Landmark Wholesale is rumoured. The Competition Commission tells suppliers they must reveal terms they offer customers, including any payments made to them, on their top six skus over the last five years while the NFU promises to find farmers willing to give examples of unfair practices by supermarkets. Vision Capital snaps up all Northern Foods' remaining businesses for £160m. M&S banks its biggest half-year profit for nine years. Tesco plans to build its biggest store yet, expanding the Extra store in Purley from 82,000 sq ft to 139,000sq ft. Ofcom bans the advertising of foods high in fat, salt or sugar to under 16s.
Premier Foods puts in a £1.2bn offer for RHM, a deal that would create £85m in cost synergies and a company with nearly £2.7bn in sales. Wal-Mart beats Tesco to India with its tie up with Bharti Enterprises, but analysts predict that this could quicken deregulation in the country allowing other retailers to enter. Nisa-Today's claims it has evidence that Tesco colludes with suppliers to drive up costs for its competitors. It also claims to have a document revealing a 23% difference in price offered to Tesco and independents by one manufacturer. The Barker report on planning issues recommends charges on any empty site or undeveloped brownfield site, to dissuade the multiples form building up landbanks. The Co-operative Group and United Co-op announce plans to merge.